John W Ambrecht vs Marc A DePaco et al

Case Number

24CV00773

Case Type

Hearing Date / Time

Fri, 01/09/2026 - 10:00

Nature of Proceedings

Demurrer and Motion to Strike; Motion to Compel

Tentative Ruling

(1) For all reasons discussed herein, cross-defendant Martinez’s motion to compel arbitration is granted as to disputes between Martinez, DT Law, and DePaco, including paragraphs 54 through 63 of the second amended cross-complaint. These disputes are ordered to arbitration pursuant to the parties’ arbitration agreement, severed from the remaining disputes in this action, and stayed pending the outcome of arbitration. This motion is otherwise denied and the remaining disputes in this action between Ambrecht, DT Law, and DePaco shall proceed in this court as currently scheduled.

(2) For all reasons discussed herein, cross-defendants’ demurrer to the second amended cross-complaint is overruled as moot as to Martinez. Cross-defendant Ambrecht & Martinez, LLP, is dismissed from this action since it was not a named cross-defendant in the second amended cross-complaint. The demurrer to the second amended cross-complaint is otherwise overruled. Ambrecht shall file a responsive pleading on or before January 19, 2026.

(3) For all reasons discussed herein, cross-defendants’ motion to strike is denied as moot as to Martinez and Ambrecht & Martinez, LLP. The motion is otherwise denied.

Background:

On February 13, 2024, plaintiff John W. Ambrecht (Ambrecht) initiated this action by filing a complaint against defendants Mark A. DePaco (DePaco) and DT Law Partners, LLP (DT Law), alleging four causes of action for (1) breach of contract, (2) conversion, (3) breach of fiduciary duty, and (4) accounting.

On April 15, 2024, Ambrecht filed the operative first amended complaint (FAC) against DePaco and DT Law which added a fifth cause of action for elder abuse.

As alleged in the FAC:

Ambrecht is an 80-year-old attorney whose practice deals primarily with estate planning. (FAC, ¶ 8.)

In June 2021, Ambrecht joined DT Law pursuant to an agreement under which Ambrecht would keep his book of business and receive 100 percent of collected billables less agreed upon overhead costs. (FAC, ¶ 10.)

Under that agreement, DePaco and DT Law would not make any profit from Ambrecht’s clients during the time Ambrecht continued to work. (FAC, ¶ 10.)

In 2022 and 2023, DePaco and DT Law collected money from Ambrecht’s clients but did not remit the amounts owed to Ambrecht. (FAC, ¶ 13.)

On June 7, 2024, DePaco and DT Law filed an answer to the FAC generally denying its allegations and asserting twenty-four affirmative defenses.

On September 15, 2025, after motion practice over the first amended cross-complaint, DePaco and DT Law filed the operative second amended cross-complaint (SACC) against Ambrecht and cross-defendant Leticia Martinez (Martinez) alleging three causes of action for (1) breach of contract (against Ambrecht only), (2) fraud (against Martinez only), and (3) intentional interference with contractual relations (against Ambrecht only).

As alleged in the SACC:

DePaco and David Tappeiner (Tappeiner) formed DT Law pursuant to a partnership agreement (Partnership Agreement) dated June 29, 2020. (SACC, ¶ 7.) DePaco was DT Law’s managing partner. (SACC, ¶ 9.)

In November 2020, Ambrecht approached DT Law regarding a potential working relationship between his firm, Ambrecht & Associates LLP (A&A), and DT Law. (SACC, ¶ 11.)

In December 2020, Ambrecht and DT Law discussed an arrangement (Arrangement) whereby DT Law would procure and make available to Ambrecht an adjoining suite, and Ambrecht would reimburse DT Law for certain costs and transition his book of business to DT Law once Ambrecht wound down his practice. (SACC, ¶ 13.)

In July 2021, the parties agreed to a first modification of the Arrangement (First Modification) pursuant to which DT Law assumed many of Ambrecht’s direct operational costs and streamlined Ambrecht’s billing and collections in exchange for an administrative fee. (SACC, ¶¶ 17 & 19.) DT Law become the direct employer of Ambrecht’s team. (SACC, ¶ 18.)

In August 2021, Ambrecht pushed for a second modification of the Arrangement (Second Modification) to require that payroll to Ambrecht be made through DT Law. (SACC, ¶ 23.) The Second Modification necessitated and was documented in a written amendment to the Partnership Agreement (Partnership Amendment). (SACC, ¶¶ 23-24.) Ambrecht was admitted into the partnership as an income only, non-equity partner and Ambrecht’s current and former clients were transferred to DT Law. (SACC, ¶ 24.)

In December 2021, DT Law hired Martinez as a senior associate. (SACC, ¶ 10.)

By March 2022, all personnel of Ambrecht’s team except one paralegal (Beverly Robison) had left, forcing DT Law to shift resources to support Ambrecht’s practice. (SACC, ¶ 35.) DT Law made the services of Martinez available to Ambrecht to ensure there were sufficient resources to service his clients. (Ibid.) DT Law did not charge Ambrecht for such services. (Ibid.)

By September 2023, Tappeiner left DT Law. (SACC, ¶ 38.)

On December 11, 2023, Ambrecht gave notice to DT Law that he was leaving the firm effective January 1, 2024. (SACC, ¶ 39.)

By December 31, 2023, Martinez had made the decision to leave DT Law and form Ambrecht & Martinez, LLP (AML). (SACC, ¶ 60.)

On December 31, 2023, Martinez emailed DePaco and inquired about receiving an additional bonus so that she could plan her finances for “this next year.” (SACC, ¶ 58.)

DT Law paid Martinez the additional bonus of $20,000 but would not have done so had Martinez told DePaco that Martinez was leaving DT Law. (SACC, ¶ 61.) Once Martinez received this bonus, she left DT Law. (SACC, ¶ 62.) Martinez’s failure to inform DT Law and DePaco that she was leaving was fraud by omission or concealment. (SACC, ¶¶ 61-63.)

Ambrecht did not follow DT Law procedures for preparing invoices for the months of October, November, and December 2023. Ambrecht refused to cooperate on these issues. (SACC, ¶ 44.) As a result, DT Law has not been paid for services rendered during this timeframe. (SACC, ¶ 46.)

Ambrecht advised all his clients not to pay outstanding DT Law invoices. (SACC, ¶ 51.) Ambrecht told DePaco that if any collection efforts were undertaken by DT Law regarding these invoices, he would sue DePaco. (SACC, ¶ 52.)

On November 12, 2025, Ambrecht, Martinez, and AML filed a demurrer to the SACC. This motion is opposed. AML is not a named party in the SACC but was previously named as a cross-defendant in the first amended cross-complaint (FACC).

On November 12, 2025, Ambrecht, Martinez, and AML filed a motion to strike portions of the SACC. This motion is unopposed.

On November 13, 2025, Martinez filed a motion to compel arbitration. This motion is opposed.

On December 8, 2025, the court advanced the hearings on all three motions to this hearing of January 9, 2026.

A trial confirmation conference is scheduled for March 13, 2026.

Analysis:

(1)       Motion to Compel Arbitration

Martinez moves to compel arbitration of her dispute with DT Law and DePaco pursuant to an employment agreement dated November 30, 2021, which contains an arbitration clause (Arbitration Agreement). (Declaration of R. Chris Kroes (Kroes Decl.), Ex. A.) The Arbitration Agreement is signed by Martinez and by DePaco in his capacity as managing partner of DT Law. (Ibid.) Ambrecht is not a party to the Arbitration Agreement. (Ibid.)

Martinez, DT Law, and DePaco do not dispute that the Arbitration Agreement exists and covers the dispute between them. (Motion, p. 3, ll. 15-18; Opp., p. 2, ll. 1-8.) Ambrecht did not take a position on this motion. None of the parties took a position on what, if any, claims or defenses in this action should be stayed in the event the motion to compel arbitration is granted in whole or in part.

DT Law and DePaco argue that Martinez waived her right to compel arbitration by actively litigating this lawsuit since June 2024. Martinez argues that she had no knowledge of the Arbitration Agreement until it was produced at a deposition in November 2025, that she promptly moved to compel arbitration after becoming aware of it, and there was no waiver.

As to Martinez’s initial burden, “[t]he party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence an agreement to arbitrate a dispute exists.” (Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1120.) “In determining the scope of an arbitration clause, ‘[t]he court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made [citation].’ ” (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744.)

The Arbitration Agreement provides in part: “Arbitration: You and the Company agree to submit all disputes arising out of your employment to final and binding arbitration in Santa Barbara, California, before an arbitrator associated with the American Arbitration Association….” (Kroes Decl., Ex. A. at p. 2.) The Arbitration Agreement “is to be governed by California law ….” (Ibid.) Martinez carried her burden to show that an agreement to arbitrate the dispute exists. DT Law and DePaco do not argue otherwise. (Opp., p. 2, ll. 1-8.)

As to DT Law and DePaco’s burden to establish waiver, “the party opposing enforcement … must prove by clear and convincing evidence that the waiving party knew of the contractual right and intentionally relinquished or abandoned it.” (Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 584 (Quach).) “Under the clear and convincing evidence standard, the proponent of a fact must show that it is ‘highly probable’ the fact is true.” (Ibid.)

“The waiving party’s knowledge of the right may be ‘actual or constructive.’ ” (Quach, supra, 16 Cal.5th at p. 584.) “Constructive knowledge is codified in Civil Code section 19.” (Ralph Andrews Productions, Inc. v. Paramount Pictures Corp. (1990) 222 Cal.App.3d 676, 682 (Ralph Andrews).) “Every person who has actual notice of circumstances sufficient to put a prudent person upon inquiry as to a particular fact has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he or she might have learned that fact.” (Civ. Code, § 19.)

To show constructive knowledge, “[t]he circumstances must be such that the inquiry becomes a duty, and the failure to make it a negligent omission.… [Citations.] In many cases it has been said that means of knowledge are equivalent to knowledge. [Citations.] This is true, however, only where there is a duty to inquire, as where [a person] is aware of facts which would make a reasonably prudent person suspicious.” (Ralph Andrews, 222 Cal.App.3d at p. 682.)

Martinez was first sued in this action on June 7, 2024. (Cross-Complaint.) Martinez provides evidence that she was not aware of the Arbitration Agreement throughout the course of this action until November 4, 2025, when it was produced at the deposition of DT Law’s office manager. (Declaration of Leticia Martinez (Martinez Decl.), ¶¶ 8-14.) Martinez’s counsel establishes that no party had previously raised arbitration in this action and the agreement had not been previously produced. (Kroes Decl., ¶¶ 3-5.) DT Law and DePaco do not dispute the circumstances of production.

DT Law and DePaco argue that Martinez signed the employment agreement in 2021 and that she is an attorney, and thereby conclude her knowledge is established for purposes of waiver. (Opp., p. 3, l. 20 - p. 4, l. 6.) DT Law and DePaco do not submit additional evidence on the issue of Martinez’s actual or constructive knowledge of the Arbitration Agreement.

Martinez’s signature in 2021, in and of itself, does not establish she had actual knowledge of the Arbitration Agreement at any point from the date this action was initiated against her in June 2024 to November 2025. Moreover, that Martinez is an attorney, participated in the litigation after being sued, and was previously employed by DT Law does not establish constructive knowledge. The evidence establishes that this action did not involve the Arbitration Agreement until November 2025, and before that time there was no reason for Martinez to be suspicious that the Arbitration Agreement existed because she did not recall it, and no other parties had produced it or referenced it. (Martinez Decl., ¶¶ 8-14; Kroes Decl., ¶¶ 3-5.)

Importantly, the evidence presented by DT Law and DePaco on this issue consisted of a concise declaration from counsel that did not address Martinez’s knowledge of the Arbitration Agreement or circumstances relating to such knowledge. (Declaration of Richard D. Carter, ¶¶ 1-4.) The declaration only provides evidence of Martinez’s conduct in participating in her defense while this action was pending. (Ibid.) There was no evidence presented by DT Law or DePaco as to how the Arbitration Agreement was negotiated or executed, or whether Martinez was ever provided a copy of the Arbitration Agreement. (Ibid.)

Because DT Law and DePaco have not carried their burden to show by clear and convincing evidence that that Martinez had actual or constructive knowledge of the Arbitration Agreement during any period when she could have previously raised it in this action, waiver has not been established. The evidence before the court does not establish that Martinez intentionally relinquished or abandoned her rights under the Arbitration Agreement. (Quach, supra, 16 Cal.5th at p. 584.)

“On petition of a party to an arbitration agreement … the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] (a) The right to compel arbitration has been waived by the petitioner; or [¶] (b) Grounds exist for rescission of the agreement….” (Code Civ. Proc., § 1281.2, subds. (a) & (b).)

Martinez, DT Law, and DePaco are subject to the Arbitration Agreement, but Ambrecht is not. The dispute involving Martinez is a narrow set of issues pertaining to the one-time payment of a performance bonus. (See SACC, ¶¶ 53-63.) The court will sever this dispute involving Martinez, stay this dispute pending the outcome of arbitration, and order Martinez, DT Law, and DePaco to arbitration pursuant to the Arbitration Agreement. (Code Civ. Proc., §§ 1281.2, subds. (a) & (b), 1281.4.) The remaining disputes between Ambrecht, DT Law and DePaco, which are not subject to the Arbitration Agreement, shall proceed in this action as scheduled.

(2)       Demurrer to SACC

As to Martinez, her arguments are moot because the court granted her motion to compel arbitration.

As to AML, AML was named as a cross-defendant in the FACC. (FACC.) The court granted cross-defendants leave to amend after sustaining a demurrer to the FACC. (Minute Order, September 5, 2025.) AML was not named as a party to the SACC. (SACC.) The court will treat AML’s demurrer as a request for dismissal and AML is dismissed from the action. (Code Civ. Proc., § 581, subd. (f)(2).)

As to Ambrecht, he argues that the cause of action for intentional interference with contractual relations is improper because DT Law and DePaco were not granted leave to assert this cause of action in the previous demurrer ruling. DT Law and DePaco argue that new facts were discovered in September and November 2025 supporting this theory of recovery. (Opp., p. 4, l. 4 - p. 5, l. 11.)

The court will treat DT Law and DePaco’s opposition as a request for leave and treat the SACC as the amended pleading filed pursuant to that leave. (See Code Civ. Proc., § 128, subds. (a)(3) & (a)(8); Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, 1377-1378 [discussing court’s inherent powers to fashion procedures to ensure the orderly and efficient conduct of the court’s business].) “Leave to amend should be denied only where … no liability exists and no amendment would change the result.” (Edwards v. Superior Court (2001) 93 Cal.App.4th 172, 180.)

It appears a cause of action for intentional interference with contractual relations has been sufficiently alleged against Ambrecht for purposes of granting leave. (SACC, ¶¶ 47-53.) Ambrecht does not argue the SACC failed to allege the required elements of this cause of action. (See Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148 [required elements].) Accordingly, Ambrecht’s demurrer is overruled.

(3)       Motion to Strike Portions of SACC

As to Martinez, her arguments are moot because the court granted her motion to compel arbitration.

As to AML, its arguments are moot since it has been dismissed.

Ambrecht argues the prayer for punitive damages and the paragraphs pertaining to the new cause of action for intentional interference with contractual relations should be stricken. DT Law and DePaco did not file an opposition.

“Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof ….” (Code Civ. Proc., § 435, subd. (b)(1).) “The court may, upon a motion made pursuant to [s]ection 435, or at any time in its discretion, and upon terms it deems proper: [¶] … [s]trike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc., § 436, subd. (a).) “In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

As to punitive damages, “[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) “Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim.” (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166.) “In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) “ ‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff ….” (Civ. Code, § 3294, subd. (c)(1).)

The SACC alleges that Ambrecht instructed all his clients not to pay the outstanding DT Law invoices, told DePaco that he would sue DePaco if any collection efforts were undertaken pertaining to the unpaid invoices, did not want DT Law to get paid for these invoices, and engaged in conduct intended to cause economic injury to DT Law. (SACC, p. 10, l. 18 - p. 11, l. 4.)  

The court assumes for purposes of this motion that a cause of action for intentional interference with contractual relations has been alleged since no substantive pleading challenge has been made to these allegations. Assuming the truth of these allegations, the ultimate facts supporting punitive damages have been alleged based on malice or intentional misconduct. (Civ. Code, § 3294, subd. (c)(1).)

Accordingly, the court will deny Ambrecht’s motion to strike the prayer for punitive damages in the SACC. (Civ. Code, § 3294, subds. (a), (c)(1).) As to Ambrecht’s arguments to strike the newly asserted cause of action for international interference with contractual relations, the court will deny his motion to strike for the same reasons his demurrer was overruled.